Family Businesses in Stock Markets

In many Asian stock markets, there are listed companies that are largely controlled by families. I am still interested in identifying the key attributes of successful family businesses over few generations.

On this article, I am surprised that one executive dares to say that its company's planning horizon is 20 years. It is known that forecasting on quantitative level tend to be fuzzy when it goes beyond 5 years. It is the resultant of unexpected changes affecting the variables that are in your forecasting model.

However, it may be possibility if the product outlook for beyond 5 years is clear. For example, Coca Cola (KO) is still selling the same product for many decades. By virtue of that, it is reasonable to lay out 20 years planning horizon.

I recall reading a post in a local (Singapore) forum. It says about comparing salary to total market capitalisation of a listed firm. I think it is flaw way to conclude that the CEO is overpaid. Charlie Munger has emphasised the importance of incentives. It is highly important to study what kind of incentives they receive in connection to running a listed company.

After all, there is pros and cons of family businesses that are listed in stock market. It is good to have CEO owning huge shares in the aforesaid family business. 

One would point out the issue associated with Haw Par Corporation with strong cash flow moat from healthcare division being controlled by Wee family. It was still in undervalued territory for many years. Someone said that without Wee family's control, Haw Par Corporation's share price will rise, moving out of the undervalued territory. We will see if it really happen in the future.

On the other hand, Berkshire Hathaway shareholders benefit greatly from excellent capital allocation made by the major shareholder, Warren Buffett.

All that said, we have to judge their characters after all. Do you have better suggestion(s) to identify?